© Reuters.
By Peter Nurse
Investing.com – The US dollar rose in early European trade on Thursday as risk sentiment favoring the safe haven weakened, but remained near two-month lows as a chilly economy signals a pause in the reserve rate hike cycle US Federal.
At 03:55 ET (07:55 GMT), which measures the greenback against a basket of six other currencies, it was trading 0.1% higher at 101.625, above the two-month low of 101.140 seen during the previous session.
Economic data out of the United States indicated slowing economic growth, expanding at a more measured rate in March as demand slowed, while the United States fell to its lowest level in nearly two years in February.
Fears that this will lead to a recession in the world’s largest economy have hurt sentiment towards risk, with the dollar benefiting as a safe haven, especially ahead of the Easter weekend.
However, this also heightened expectations that the Bank may pause its hawkish policy, as markets are still pricing in more than a 50% chance of the central bank standing by when it next meets in May.
The weekly figure is due later in the session, but all eyes will be on an official on Friday, as analysts expect the economy added 240,000 jobs last month, down from the number in February.
Analysts at ING said: “Markets are clearly pinning more recessionary risks on the dollar, but…the Fed appears to have offered no solid underpinning to the interest rate outlook, so quieter readings in key releases could certainly lead to more… downward pressure on the dollar. , on a note.
“Conversely, readings above consensus may lead to a rapid rebound in highly volatile Fed funds rates and lead to a dollar correction.”
It traded pretty flat at 1.0903, supported by a 2.0% m/m increase in February, much more than the slight 0.1% increase that was expected.
It is widely expected to continue raising interest rates when it next meets in May as it continues to struggle at elevated levels.
“I’m looking at food, that’s where the inflationary pressure is probably the most intense. It’s still going up right now,” said Philip Lane, chief economist at the European Central Bank, on Wednesday. “I don’t think we’ve reached the peak of food inflation, it’s not there yet but it’s expected to go down again this year.”
Overall inflation in the eurozone slowed sharply last month due to lower energy costs, but core price growth jumped to a record high.
It rose to 1.2462, not far from the ten-month high this week, and fell by 0.2% to 0.6705, while rising 0.1% to 131.38.
It rose to 6.8799, with the yuan supported by showing Chinese services activity in March expanded at the fastest pace in more than two years.